|
|
The Creative Business is a series of 12 modules of information about developing creative enterprises, written especially for people running businesses in the creative industries.
The information is particularly relevant to creative businesses and cultural enterprises in the fields of Advertising, Literature and Publishing, Visual Arts, Performing Arts, Music, Design, Cultural Heritage, and Crafts.
Published on the Creative Choices website, this series of 12 articles covers a range of business issues facing creative entrepreneurs:
1. It's Creative but is it a Business? Business Feasibility - deciding whether or not to make a business from your creativity.
2. You're Creative - but so are they! Dealing with competition - understanding your competitive advantage in relation to rivals in the marketplace.
3. Not All Customers are Good Customers. Choosing Customers - finding the right customers to fit with your creativity, ambitions and values.
4. Precision Marketing. Advertising and Publicity - communicating your key messages to customers.
5. Structuring Your Enterprise. Setting up a Business - choosing the best structure: self-employed, not-for-profit company, or commercial enterprise?
6. Make Money While You Sleep! Protecting your Ideas - using intellectual property rights to protect your creativity and make money while you sleep.
7. Creative Collaborations and other essential C-words. Working in partnership with other individuals and businesses in the creative or other sectors.
8. Raising and Managing Money. Financial Management - getting the right financial result by managing your income and expenditure.
9. Customers as Partners. Keeping Customers - listening to customers and building closer relationships with your best customers.
10. Reassuringly Expensive. Pricing - deciding how much to charge by looking at pricing and value from the customers' point of view.
11. Focusing your Enterprise - selecting priorities for development as new opportunities arise.
12. Growing your Business - key issues ahead as your business grows.
---
Read and comment on these articles by David Parrish at The Creative Business blog on the Creative Choices website.
---
For many people, the words ‘business’ and ‘culture’ don’t sit comfortably side by side. Some people assume that culture has to be non-commercial to be valid, and therefore to apply commercial thinking to cultural endeavour is to pervert it. But even charities and ‘non-for-profit’ organisations in the arts and cultural sector need to be business-like, even though the traditional business motive of profit maximisation does not apply.
Many people in the arts are reluctant to use business terminology, despite being very professional and successful in achieving their aims. When I was interviewing creative enterprises for my book ‘T-Shirts and Suits’, several managers said that they had never devised a ‘business strategy’ or used ‘market research’. These terms were simply alien to them. In fact they did do these things, but didn’t use those words or document these processes conventionally. More often than not they were skilled at growing their business and excellent at listening to customers. Ironically, cultural organisations and creative businesses are often keen to shun commercial jargon whilst actually using smart ‘business thinking’ to achieve success in their own terms.
My own background is in the cultural sector and later I also studied at business school, so I’m comfortable with business jargon but at the same time I understand the sensitivities within the arts about business vocabulary. Recently, in preparing a training workshop for arts organisations I was asked not to use the term ‘customers’ but use ‘audience’ instead. It’s a matter of choosing vocabulary appropriate to the context. In my book I feature the Windows Project, a cultural enterprise which devised a ‘Development Plan’ rather than a ‘Business Plan’ because that term fitted better with their ethos. Despite its name, it’s as robust as any business plan from the commercial sector.
The cultural sector can and should learn from other sectors, but it’s a matter of sensitively adapting techniques to fit into a different context - and maybe changing the terminology too. Equally, the commercial sector can learn from the cultural sector, but need to see what’s actually happening rather than being put off by the lack of business jargon. For example, I’ve been engaged by international corporations for revealing to them management techniques which are commonplace in the arts world, but I’ve expressed them in business-speak to make them more acceptable to pin-striped clients.
So it’s the terminology that’s the issue, not the reality. Lack of business jargon doesn’t indicate an absence of smart ‘business thinking’. It’s a point worth making, for two reasons. Firstly to dispel the myth outside the arts sector that cultural organisations are somehow ‘amateur’, simply because they use different language. Secondly to challenge the belief held by some in the cultural sector itself that using business terminology to describe what they do inevitably means somehow ‘selling out’.
In the end, it doesn’t matter whether or not we choose to use the jargon of business. What really matters is being clear about our definitions of ‘success’ and then achieving it. Then we can all become even more successful by using appropriate management methods and techniques which fit the objectives and ethos of our organisations - in the cultural sector or elsewhere - whatever vocabulary we choose to use.
--
This article was first published by www.08BusinessConnect.com
Copyright David Parrish 2009. Some Rights Reserved.
---
A useful and readable 'Creative, Cultural and Digital Industries Guide' has been published by Business Link West Midlands
It is available in hardcopy from Business Link West Midlands and downloadable as a free eBook in PDF format below.
This creative business guide was written by David Parrish, author of the book 'T-Shirts and Suits: A Guide to the Business of Creativity'.
The 48 page publication covers a range of issues relevant to enterprises in the creative, cultural and digital sectors.
Sections include:
- Strategic Planning
- Understanding your Customers
- Profiting from your Ideas
- Organisational Structures
- People and Skills
- Promoting your Products / Services
- Financial Management
- Legal and other issues
- Links to useful organisations and resources for creative enterprises
There are also four case studies featuring creative enterprises from the West Midlands region: 383 Project, Stan's Cafe, Gas Street Works, and Capsule.
Download PDF:
Creative, Cultural and Digital Industries Guide (PDF) [3.2 MB]
Businesses in the West Midlands region of England can obtain a hard copy of the Guide.
Contact Business Link West Midlands on 0845 113 1234.
The creative industries guide was designed by iDM Design, Wolverhampton This creative business guide was written by David Parish of TShirts and Suits.
David Parish retains copyright in this material and other writing about the business of creativity, as published in the book 'T-Shirts and Suits: A Guide to the Business of Creativity', the publication 'Designing Your Creative Business' and a series of other articles, blogs and 'Ideas in Action' features.
Similar creative business guides can be written for other organisations in the creative, cultural and digital sectors.
Contact David Parrish to discuss options and possibilities for your own version of this creative industries guide.
---
Telling Africa’s story from Africans’ point of view is the mission of Africa Media Online, the agency representing African media professionals to the global market.
“In the ‘information society’, if we are to create some semblance of global information democracy, it is important that Africans are heard from their perspective,” says Africa Media Online’s David Larsen
His company has created systems to gather, market and deliver media to users and markets around the world. For the benefit of their world-wide customers, media from a comprehensive range of African picture libraries, museums and archives are available in one place, and managed in conformity with global standards. As well as using the latest digitisation technology, e-commerce systems make financial transactions easy, secure and quick.
The technology driving all this is MEMAT 2.0 (Media Market Technologies), which is an online content management system, developed in-house using open source technology, and launched in 2004. This software provides each member organisation with the facilities to organise their libraries and archives, backed up by training and technical support.
As well as being relatively inexpensive, it is highly scaleable. This means that it can power the collections of individual photographers such as South African news photographer, Rajesh Jantilal, but also the multiple collections of a media organisation such as Cape Town’s Oryx Media and the world-class Bailey’s African History Archive, based in Johannesburg, South Africa.
In addition to running their own websites, African picture libraries and media archives recognise that they benefit by working together in a form of ‘co-opetition’. They can do this by also offering their images through ‘africanpictures.net’, which David Larsen describes as an ‘online superstore’.
Clearly this offers great customer benefits as the global audience can find most content in one convenient place.
David Larsen, a photographer and journalist, set up Africa Media Online Pty. (Ltd.) in Pietermaritzburg, South Africa in 2000, along with Paul De Villiers, an internet entrepreneur. Paul sold his shares in 2006 and new investors were attracted to the company, including Kabusha Technology Investments Pty. (Ltd.), a black-owned enterprise which now controls the single largest shareholding in Africa Media Online. This relationship demonstrates a clear commitment to social transformation, according to David Larsen. The investment structure brings financial resources to the company and at the same time creates an organisational structure which is fitting to the local cultural and political environment.
In its first seven years of business, Africa Media Online has concentrated on photographic images but its systems have always been designed for multiple media forms. The company is aligning itself to the convergence of media so that it will be able to also offer documents, sound and video files. This will mean an even better service for its global distribution partners and clients all around the world.
---
Link to Africa Media Online
More about Co-opetition
More about Organisational Structures
---
Download this article (PDF, 134K)
TÉLO is the first public telephone especially designed for public transport vehicles. Using a card for payment, millions of people using public transport are already
using the phone on buses, trains and underground transport networks.
Founded in August 2004, by Paulo Lerner and André Averbug, Brazilian company PV Inova (Public Vehicular Innovations) invented the system and have registered a patent to protect their intellectual property, initially
in Brazil.
“Writing the patent was very time consuming, having lasted about six months”, said Leonardo Gadelha Sampaio, “we had the support of a patent lawyer for the writing of the patent itself, and of a respectable law-firm for the registration of it. We registered the patent in Brazil and internationally through the PCT”. The Patent Co-operation Treaty provides a standardised method of registering a patent, initially in the country of origin, and paves the way for easier registration of the same patent in 137 countries which have signed up to the Treaty. Despite the PCT, there is no such thing as an ‘international patent’ – a further separate registration is required for every additional member state.
Photo: Inova’s executive partners: Paulo Lerner (Technology), André Averbug (Planning) and Leonardo Gadelha Sampaio (Marketing).
In choosing further countries for patent registration, PV Inova will be targeting other countries with similar social profiles as Brazil, in Latin America, East Asia and Africa. In these countries, millions of people use public transport and rely on public communication networks rather than personal mobile phones. They will also register the patent in Europe and the USA for strategic purposes – to deter competition for as long as possible.
PV Inova has a social mission – to make communication accessible and affordable to the masses. They also have commercial objectives and recognise that these customers, though not wealthy as individuals, collectively have massive amounts of money to spend. The company has used socio-economic statistics combined with transportation data to analyse the Brazilian market. Instead of focusing on the wealthy elite, their income streams will come from the aggregated spending power of millions of ordinary people. This is a ‘base of the pyramid’ or ‘BoP’ strategy, selling services in high volume but at low prices.
Innovate in product design, Leonardo and his colleagues at PV Inova have used a novel combination of strategies to raise funds for their projects. Investors see the potential of the company and PV Inova has had two rounds of investment, firstly from a ‘business angel’, and later from an ‘investment club’ of seven smaller shareholders. 80% of shares are owned by the three executive partners, with the remaining 20% shared by 11 others. The company’s business plan forecasts an outstanding return on investment. PV Inova also plans to reinvest its profits in further technological developments, including digital TV.
Apart from the huge Brazilian public transportation market, growth will also come from international strategic partnerships with telecommunications companies, based on the provision of the service and the licensing of their intellectual property.
Download this post as an article. (PDF, 115KB)
Download article
Link to PV Inova website.
Please contact me with other examples of creative enterprises using interesting marketing strategies and intellectual property to develop their businesses.
Michael E Gerber, in his book on the E-Myth (E-myth Revisited) , points out that there is a fundamental difference between knowing a technical skill or trade (eg as a designer, mechanic, chef) and running a business based on that skill (a design agency, a workshop or a restaraunt). Many would-be entrepreneurs who break away from paid employment to set up their own businesses become trapped, not liberated. They end up working as a cog in a machine of their own making, rather than setting up a money-making machine that they are in control of. This is the Entrepreneur Myth. These people are workers, not true Entrepreneurs, according to Gerber.
Many people have a dream of building up a business so that they can eventually sell it and secure a significant financial reward, maybe for retirement or reinvestment. In order to be able to do this, however, the business must ultimately be independent of the ongoing labour of the owner. Many businesses become virtually worthless once the owner retires and therefore have no value to a potential buyer.
A true entrepreneur will work 'on' a business rather than 'in' it. In other words, they will set up money-generating business, which ultimately makes money for the owner without his/her direct involvement.
This is the difference between being a 'worker' (or labourer) on the one hand, or a true 'entrepreneur' on the other.
Even if you have your own creative business, are you in fact a 'creative labourer' - or a true entrepreneur? In short, the 'acid-test' question is this: have you set up a business which can generate income even when you sleep - or is your income totally dependent on your ongoing labour? In the creative industries, the key to building a business which generates income independent of your ongoing labour, is the management of intellectual property.
The Community Interest Company is a legal structure designed for Social Enterprises.
Company legislation was never designed for community and voluntary sector organisations whose ethos is 'not-for-profit' (or more precisely 'non-profit-distributing'). Social enterprises, in particular, have no legal structure designed specifically for them and tend to register as a 'Company Limited by Guarantee without Share Capital', sometimes as a 'Company Limited by Shares', or go down the co-operative route to incorporate as an 'Industrial and Provident Society'.
The 'Community Interest Company' was initially proposed September 2002 by the UK Government's Strategy Unit and the idea became a part of the 'Companies (Audit, Investigations and Community Enterprise) Act' which became law in October 2004. Its main provisions will came into force in July 2005 and the first CICs were registered soon afterwards.
The new legal entity is designed for small scale social enterprises, which are established for community benefit, and which use their assets for community purposes (in perpetuity). In addition, CICs will have the ability to raise funds by issuing shares.
A Community Interest Company is primarily a registered company but with additional features. The company can be a Company Limited by Shares, a Company Limited by Guarantee without Share Capital or even a Public Limited Company. CIC status can be regarded as an additional 'wrapper' around the basic company constitution and structure. (This is similar to charitable organisations first registering as companies limited by guarantee and then seeking additional charitable status 'on top'.)
This structure enables organisations to work within the well-established company framework without having either charitable status or the commercial motive of profit distribution.
Key Features of the Community Interest Company
1. The 'Asset Lock'. This is a restriction on distributing profits or assets to members. Importantly, this asset lock applies in perpetuity. (In the case of a company limited by guarantee without share capital, though there are no shares through which to distribute dividends, the constitution can be changed at a later date to distribute profits to members). If the organisation ceases to be a CIC, remaining assets cannot be distributed to members but must be used for community benefit.
2. The 'Dividend Cap'. A CIC which is incorporated as a company with shares is able to raise funds by issuing shares, but the dividend payable on shares will be subject to a cap, set by the Regulator, in order to protect the company's assets. The Regulator will set the dividend cap as a percentage of the amount paid up on the relevant share.
3. The 'Community Interest' test. The CIC must satisfy the regulator that the company's activities are in the interests of the community. (The legislation states that "a company shall satisfy the community interest test if a reasonable person might consider that its activities are being carried out for the benefit of the community".)
4. The Community Interest Annual Report. A CIC is obliged to publish an annual report which demonstrates how its activities have been for the community benefit and how it has involved stakeholders in its decisions. The report must contain details of any shareholders, dividends paid, and directors' remuneration. The report is submitted annually to Companies House and is held on the public record.
There are no particular tax benefits for CICs (such as those given to charities).
Charities. A company cannot be both a CIC and a Registered Charity. However charities in England and Wales will be allowed to convert into CICs with the permission of the Charities Commission. Charities will also be able to establish CICs as subsidiaries.
Download information sheet (PDF, 46KB)
Download community_interest_company_cic.pdf
|
|
|
